Donald Trump, sorry – President Donald Trump – made his name in real estate and other businesses, and now he has the keys to the White House and, with it, the title of most powerful man in the world. For a man who made the economy a significant part of his election campaign, it’ll be no surprise that some of the biggest changes he enacts during his tenure in the White House will have to do with financial markets, trade, and businesses. But what exactly can we expect from the economy over the next four years, and how will businesses be affected? We take a look at some of the biggest shifts that might occur, as well as some of the winners and losers of Trumps policies.
Wall Street hasn’t always been the most consistent street on earth, but even by the financial district’s up and down past, Trump’s presidency is something new entirely. If there’s one thing that the stock market needs to be healthy, it’s stability. And Donald Trump doesn’t offer stability. In fact, his rise to the highest position in the land was such a shock that Wall Street was shook the moment it was announced he had won the election. Of course, Wall Street will eventually bounce back – and might even benefit from some of Trump’s policies, but the ever present threat of destabilization will make the stock market increasingly volatile, especially in light of the president’s mantra of ‘America First’. How does that attitude affect a global market? We’ll have to wait to find out.
After the economy, Donald Trump’s main focus was on immigration. He was mostly talking about illegal immigration, but the wider implications of his rhetoric were hard to avoid, even if they were just collateral damage: immigrants will not be front of the queue to benefit from Trump’s policies. The moral debate about this is irrelevant to business; what actually matters is how businesses that rely on foreign labour will be able to cope with any changes that limit a foreigner’s ability to work in the United States. Resort areas are dependent on overseas labour to fill busy seasonal periods, and they won’t be easily replaced; indeed, the reason they are hired is often because the company can’t find Americans who want to work on a short term basis.
For companies that hire the very best employees regardless of where they hail from, such as start ups and IT companies, Trump’s policies might make it more difficult for them to get the necessary work visas.
If you’re a high earner and/or have a vested interest in the profits of a corporation, then Donald Trump might just be the hero you need in order for you to take home more of your money. For starters, President Trump is going to simplify the tax process, more than halving the number of tax brackets. If you’re among the highest wage earners, you’ll see your tax rate drop from nearly 40% down to 33%. Corporate taxes are also being lowered to 15%, and companies who have been concealing their earnings in overseas territories will be able to move their money back home for a one off 10% tax.
Donald Trump is a businessman and, like many other businessmen, has a loathing of nitpicking regulations that stop companies doing business with another and the public at large. Now that there is a businessman in the White House, we might soon have a situation whereby many of the regulations that have stagnated the economy are lifted, and businesses allowed to flourish. This could mean changes in lending laws, financial and banking practices, emission laws, and much more becoming the norm as an era of an open economy comes to pass.
While this might be good for business owners, workers are more likely to feel the strain of any rollbacks of regulations, as in many cases they were initially enacted into law their benefit. For instance, getting rid of the Affordable Care Act, or at least the parts that say businesses that employ 50 or more workers have to offer health coverage, would have a hugely detrimental effect on workers. See also the minimum wage, which Trump has been wavering on. At the moment, he supports a rise to $10 an hour – but will the change, or is it enough anyway?
Many businesses are connected with other parts of the world in some way or another, and this is only made possible due to trade agreements that have been agreed in the past. Donald Trump has vowed to rip up the trade deals that he believes do more harm than good for the United States, and negotiate new deals with countries around the world. This might sound good to some Americans, but the policies come with a long set of problems. For instance, Trump would like to negotiate trade deals that bring American factory jobs back to the states, but this simply can’t happen – any companies that move back to the states will use automated machines to make their products, not workers. Additionally, punishing companies who outsource their work overseas might make them employee domestically, but there would no way that prices could stay the same if workers commanded an American salary. And what a public that cannot afford to buy do for the economy?
Trump has only been Commander-in-Chief for a matter of days, so it’s too early to tell exactly how his presidency will shape social and economic life in the United States and beyond. Needless to say, the economy is heading some big changes once Trump gets properly underway with his plans. If the potential changes listed above frighten you, then A. You’re not alone and B. Perhaps it’s worth remembering that Trump has a habit of flip flopping on ideas, even those that appear to be key to his policies, depending on his whim. So it might not all be as bad as it seems. Or it might be worse. We’ll have to wait and see.
How to Trade Shares for Beginners
Although expectations had been modest for 2019, the stock markets around the world had been active in 2019 and the positive returns seen so far have exceeded even the most optimistic expectations. Supported by easy monetary policies around the world, as well as by positive economic expectations for 2020, stocks continue to move, which makes a significant number of people deciding to start investing. Since stock trading is much harder than most of them think, let’s see some of the most important things beginners must consider in order to accelerate their learning curve.
Stick with the most liquid shares
Finding “the next big thing” is one of the illusions that seduces most of the beginners. They spend a significant amount of time looking for those companies that will have huge returns over the next months of years. Not even the most-skilled stock traders are able to do that, so why do you think you will?
Instead of looking for those shares, stick with the companies that already have a leading position in the industry. Google, Facebook, Microsoft, Apple, and Boeing are just some of the names that are popular at the time of writing, and looking at their performance in the long run, so far, they’ve managed to impress.
Study educational materials
Beginners fail to understand that share trading is a skill-based endeavor and study is one of the most important parts of the process. Study as many educational materials as you can and gain as much knowledge as possible because you’ll definitely need it. This guide and other similar ones will introduce you to share trading and help you understand the basic concepts. Remember this axiom: “Around 90% of the traders lose 90% of their capital in their first 90 days of trading”. Education is one of the main factors why beginners stumble into the same mistakes over and over again. You don’t want to be in the same position as most of the people who don’t learn and spend time to sharpen their skills.
Build a portfolio
Closely linked to our first tip, building a portfolio of uncorrelated assets is one of the most important things to consider, if you want to limit the damages of your mistakes. No matter how good you are, in trading, you won’t make money all the time. Diversification will help you minimize the effects of some losing trades. Don’t concentrate all the risk in a single stock and instead pick at least three or four names that might perform positively in the near-term.
Saudi Arabia halves oil production: How long will it last, and will it affect oil prices?
Saudi Arabia announces it will halt 50% of its oil production. This Vestle news article will explore the possible financial impact.
Since recent drone airstrikes crippled Saudi Arabia’s Aramco oil processing facility in mid-September, the country – the world’s No. 1 exporter of oil* – has been forced to close half the plant while reconstruction takes place. While no casualties resulted from the attack, the real harm is finally coming to light, as the impact on Saudi Arabia’s oil industry is becoming clearer. This Vestle news article explores this important topic.
Aramco estimates that the closure will affect almost 5.7 million barrels of crude oil per day, which amounts to roughly 5% of the world’s daily oil production. To help you put that into perspective, consider that Saudi Arabia produced 9.85 million barrels a day in August 2019. And it’s not just oil production that will suffer. Saudi Energy Minister Abdulaziz bin Salman also indicated that the closure has forced a temporary halt in gas production, limiting the supply of ethane and natural gas by 50% as well.
One particular detail that those with an eye on the financial markets might find interesting is that the attacks took place at a time when Saudi Arabia continues to progress toward taking Saudi Aramco public – a first for the kingdom’s global-reach energy sector. How much money are we talking? As the world’s most profitable oil company, it’s estimated to be valued at around $1.5 trillion.**
Will this affect oil prices?
The short answer, according to some people, is probably yes. With Saudi oil output expected to dip below 50%, the outages present “an extreme risk situation for oil,” according to Paul Sankey, managing director for Mizuho Securities. However, measures have already been put into place. Depending on how long it takes for Saudi Arabia to recover the damaged facility, OPEC (the Organization of Petroleum Exporting Countries) is aiming to suspend production cuts to help temper the impact of the ongoing crisis. On the trading side, the International Energy Agency is expected to release strategic oil stocks, and US President Donald Trump has already authorized the release of oil from the US petroleum reserve.***
In the weeks just after the drone strikes, the price of WTI Oil on the Vestle platform showed a 13% increase, followed by a 12% decrease over the following two weeks. Also during that time, Bloomberg reported that the spread between WTI and Brent widened to 37%, which could be an indication that the oil spike might affect global prices more than other oil giants, such as the United States. Furthermore, a representative from Goldman Sachs estimates that the global benchmark for Brent Oil could rise above $75 a barrel if the plant shutdown lasts for more than six weeks.****
Will it get any worse?
Some people fear the Aramco incident represents the potential for a broader regional conflict that could escalate to the point that it affects Gulf oil production as a whole. CFRA Research oil analyst Steward Glickman said, “Oil prices are now likely to bake in a much higher geopolitical risk premium than had been absent in much of 2019.” With the recent bombing in June of oil tankers in the Gulf of Hormuz not so distant, it’s no wonder some analysts like Glickman like are raising their eyebrows. ***
Considering all the different factors that play into this situation—the global, financial and geopolitical—there’s no telling what kind of turns it will take. The only thing to do is keep an eye on the news for the political side of it, and financial sites like Vestle to see what kind of ripples such an event is making in the financial markets.
Oil prices and the financial markets
Volatility such as that recently experienced by both WTI Oil and Brent Oil can present both opportunities and risks for informed traders, such as those who invest in Contracts for Difference or CFDs, which essentially means trading on the price movement of a particular instrument without owning the underlying asset. At Vestle, you’ll find hundreds of tradable CFD instruments, from commodities like oil and natural gas to popular stocks, indices, ETFs and crypto. And thanks to a selection of trading signals, market indicators and our economic calendar, access to important financial info for global situations like this is right at your fingertips.
Vestle (formerly known as ‘iFOREX’) is the trading name of iCFD Limited, licensed and regulated by the Cyprus Securities and Exchange Commission (CySEC) under license # 143/11. The materials contained on this document have been created in cooperation with Vestle and should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83.7% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. Full disclaimer: https://www.vestle.com/legal/analysis-disclaimer.html
Fears of a 2019 European Economic Slowdown Loom
Although the spotlight is on the trade war between the United States and China, one aspect that is currently ignored by the media is represented by signs of weakness in the European continent.
Germany slows down
After posting a -0.3% GDP contraction in the third quarter of 2018, the economic indicators released from Germany in 2019 cannot support a positive economic picture. The manufacturing sectors continue to show signs of weakening, with the Markit PMI Composite now at 51.6, down from 52.3.
Industrial Production had been contraction by 1.9% in November, and both imports and exports had been down by 1.6% and 0.4%, respectively. DAX trading had also suggested there is growing concerns among investors and the main German stock index peaked out in July 2018, being now down by 15%.
Germany relies mostly on exports, being the third exporter in the world, only surpassed by the United States and China. That is why the weakness we see in Germany is actually a symptom of what’s happening in other European countries as well.
Italy and France not too encouraging
The new populist government in Italy, formed by La Lega and The Five Star Movement faced a serious challenge to get the EU’s approval for the 2019 budget, as the already high debt-to-GDP ratio (currently at 131.8%) raises concerns on whether the country will be able to meet its debt obligations in the future.
There are also serious concerns about the banking sector, which despite mergers and acquisitions, and huge capital available from the ECB, were unable to solve their problems which emerged after the 2008 financial crisis. The future of Italy is very uncertain, and analysts predict that the new government will not be able to meet their economic promises, given that we are at the end of a business cycle.
Speaking of France, the problems are social at the present time. President Macron was unable to stop the “Yellow Vests” protests, despite promises to increase the minimum wage and the overall standard of living for the very poor. France’s debt-to-GDP ratio currently stands at 97%, but given the latest promises, there are concerns whether the country will manage to keep the budget deficit below 3% in 2019, as the European treaties demand.
Although there’s a single currency in Europe, in terms of fiscal policy things were very fragmented, which is why the economic recovery had been very slow and the reason why investors predict Europe will face the greatest challenges to solve its economic, political, and social problems.
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